Having canvassed options across agricultural land, occupying waste lands, and also laying siege on rooftops of residential and commercial properties, the growing market for solar power infrastructure has found anchor in water bodies, to set up Floating Solar Photovoltaic Plants (“FSPV Plants”). While conceptually FSPVs are not defined as a separate category of renewable plants, its reference and recognition can be found in the terms and conditions for tariff determination from renewable energy sources regulations 2020 issued by the CERC which states that FSPV Plants shall mean a solar PV power project where the arrays of photovoltaic panels on a structure of the project float on top of a body of water, such as artificial basin or lake, with the help of floater, anchoring and mooring system.

With the newly generated interest in the FSPVs form the market, there are a few potential issues and challenges which could cripple the fast movement in the segment, as follows:

Limited Scope of Expansion

After facing the on-ground challenges of land acquisition, land conversion and the constant depletion of the limited available carpet areas for ground-mounted solar power plants, the industry has found new interest in inland water bodies, for setting up of solar power plants, by way of FSPV Plants. However, much like limited land space, the FSPV is staring down the inevitable limitation of finding artificial water bodies like reservoirs and dams, unless technological advancement makes FSPV Plants immune to the rigor of offshore waters.

Transmission Infrastructure

Practically, the FSPV Plants, despite its proven efficiency and workable model in terms of the apparatus and plant, face the on-ground issue of lack of transmission infrastructure. The lack of presence of grids in the vicinity could prove to be an expensive affair for developers to find transmission and injection of the power generated, also making the FSPV model inaccessible for many hard-to-abate areas. The presence of existing transmission lines near inland water bodies as well as the setting up of transmission infrastructure from the water body to nearby sub-stations is potentially a large challenge for developers and investors.

Environmental Concerns

Most recently, the Supreme Court's directions to alter the transmission infrastructure (by either shifting the wires underground or installing bird diverters) in the Rajasthan region for the protection of the Great Indian Bustard bird is a contemporary example of the conflict between the renewable energy infrastructure and environmental conservation. Ironically, the underlying intent of the surge in solar power capacity is motivated by the spirit of environmental conservation itself; however, the ambitious attempt to multiply the renewable energy portfolio may be antithetical to its very purpose. In the case of FSPVs, there is lack of scientific data and evidence about the adverse impacts that FSPV Plants may have on the aquatic ecology. In view of the experts hailing FSPVs to be a nightmare for the water body housing such plants, it is anticipated that any harm caused to the environment and its ecological balance by FSPVs could be a ticking time-bomb awaiting litigation and added costs for rectification. Going ahead, the preservation of environment and sustainable development are priority concerns.

Issues of regulatory Relaxation

Subsequent to the Environmental Impact Assessment Drat Notification of 2020, there is an increased conversation around the nature of the developments in the environmental conversation regime, and its real impact on the environment. In a bid to promote solar power, State governments had provided a slew of positive relaxations like allowing for a mere intimation to the respective State Pollution Boards, as sufficient standard for renewable energy plants. If FSPVs do have adverse impact on the water bodies housed in, such relaxed regime could be counter-productive.

Land related issues

It has been determined that solar power generating plants shall be considered as immovable property as per the Maharashtra Bench of Authority for Advance Ruling given vide GST-ARA-01/2017B-01 dated February 17, 2018 as well as the ruling of passed by The Maharashtra Appellate Authority For Advance Ruling For Goods And Services Tax given vide NO.MAH/AAAR/SSRJ/08/ 201819, Dated 5th September, 2018. Contrary to the reasoning ascribed for the respective findings, with the FSPV Plants becoming mobile and floating over a water body, a probable legal determination or differentiation would be forthcoming.

With respect to determination of the rights over the land, laws regarding ownership and rental of the underlying project land is well settled. However, it is anticipated that the mechanism for providing of right of way and domain over the water body, could have possible legal implications.

Way Forward!

With a potential of increased cost to establish and maintain transmission lines, with the limited areas of access, with the potential of unanswered legal questions in relation to land and lease, and the fear looming around the adverse environmental impact of FSPVs on the aquatic ecology all these factors could make FSPVs potentially unattractive. Whereas FSPVs have seen an attractive start in the market, policy makers should juxtapose the potential sector specific issues and implement anticipatory policies to continue the interest in the sector.  

While increased R&D on the impact of FSPVs are the need of the hour, legislative clarity on potential legal questions would be helpful in attracting investor trust and comfort in the market.

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